Skip to content

CA Final · Financial Reporting · Ind AS 10 Events after the Reporting Period

Meghna Ltd. has a reporting date of 31 March 2026 and the Board approved the financial statements on 15 June 2026. A customer had sued the company in January 2026 for Rs 60 lakh, and the company had disclosed a contingent liability. On 5 May 2026 the court settled the case, ordering the company to pay Rs 45 lakh for a breach that occurred in February 2026. What is the correct treatment?

The company should recognise a provision of Rs 45 lakh in the 2025-26 financial statements. The court settlement confirms the present obligation existed at the reporting date, so it is an adjusting event, and mere contingent liability disclosure is not appropriate.

  1. AContinue to disclose a contingent liability of Rs 60 lakh
  2. BRecognise a provision of Rs 45 lakh in the 2025-26 financial statementsCorrect
  3. CRecognise Rs 45 lakh in 2026-27 as the settlement occurred then
  4. DDisclose Rs 45 lakh as a non-adjusting event only

Explanation

The settlement after the reporting period confirms a present obligation at year end, because the breach happened in February 2026. The entity recognises a provision rather than merely disclosing a contingent liability. Rs 45 lakh, the settled amount, is the measure, not the claimed Rs 60 lakh.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 10 Events after the Reporting Period shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 10 Events after the Reporting PeriodFree diagnostic mock

More Ind AS 10 Events after the Reporting Period questions